OPEC’s simple problem. Despite Saudi cuts, it’s shipping more oil: Russell

As such, OPEC said, in its monthly report, “Although oil prices rebounded from five-month lows in (mid-May), following positive United States jobs data and assurances by Saudi Arabia that Russian Federation is ready to join OPEC in extending production adjustments to reduce a persistent supply glut”.On top of that, the U.S. EIA reported on the same day a minor draw in crude inventories, but with worrying increased gasoline inventories.Brent crude oil and the U.S. light crude dropped by 30 cents to $46.70 a barrel and $44.43 per barrel respectively to their almost six-month lows, reported Reuters.OPEC said oil inventories in industrialized countries dropped in April and would extend a decline in the rest of the year, but a recovery in production in the US was slowing efforts to get rid of excess supply.The increase came despite efforts by the Organization of the Petroleum Exporting Countries and a handful of external producers to drain stocks below five-year averages and reduce global output by 1.8 million barrels a month until March 2018.However, prices for both benchmarks are still down by around 13 percent since late May, when producers led by OPEC extended a pledge to cut production by 1.8 million barrels per day by an extra nine months until the end of the first quarter of 2018.”We’ve been running at historically high levels on the refinery side, which is pushing out more product”.The watchdog said its first forecast for 2018 made “sobering reading for those producers looking to restrain supply”.Rising U.S. oil output has undermined the impact of OPEC-led cuts.”The revisions to non-OPEC supply growth have been much greater than the upward adjustments to world oil demand growth, accentuating the imbalance in the market”, it said. For drivers, this may mean more oil hauling opportunities in the future, or other heavy-duty market driving positions to become available over the course of the next few months. Gasoline inventories rose by 2.1 million barrels. OPEC member nations – Nigeria and Libya – which are exempt from production cuts have been ramping production.”Production growth in Libya and Nigeria and continued rig additions in USA are complicating the picture, raising doubts on OPEC’s strategy”.”For OPEC, an oversupply headache became a migraine”, said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.